On July 23, 2024, Community West Bancshares (CWBC, Financial) released its 8-K filing for the quarter ended June 30, 2024. Community West Bancshares is a California-based bank holding company whose principal business is to serve as the holding company for its wholly-owned subsidiary Community West Bank N.A. Through CWB, the Company provides a variety of financial products and full-service Banking Centers within California's Greater Sacramento, San Joaquin Valley, and Central Coast regions, that provide Commercial Lending, Real Estate, Agribusiness, Private Banking, and Cash Management Departments.
Quarterly Performance and Challenges
For the second quarter of 2024, Community West Bancshares reported an unaudited consolidated net loss of $6.29 million, translating to a loss of $0.33 per diluted common share. This is a significant decline compared to the net income of $6.28 million and $0.54 per diluted share reported for the same period in 2023. The loss was primarily driven by merger-related expenses, including a provision for loan losses for the acquired loan portfolio and a realized loss on the sale of securities.
Financial Achievements and Strategic Repositioning
Despite the net loss, the company achieved notable financial milestones. Gross organic loan growth for the quarter was $49 million, or 8.89% annualized. Additionally, the net interest margin increased to 3.65% from 3.42% in the previous quarter, with total net accretion of fair value marks contributing 12 basis points of the 23 basis point increase.
"I am pleased to share that this quarter report represents the first quarter for the combined Company, following the merger that successfully closed on April 1, 2024. On behalf of our entire organization, we are excited for a bright future for our 44-year-old Bank, with our unique brand of relationship banking and experienced bankers now able to serve more communities in an expanded service area, powered by the strength of one of the largest banks headquartered in Central California," said James J. Kim, President and CEO of the Bank and CEO of the Company.
Income Statement Highlights
Key details from the income statement include:
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Interest Income | $29.06 million | $19.07 million | $20.21 million |
| Provision for Credit Losses | $9.83 million | $0.58 million | $(0.34) million |
| Total Non-Interest Income | $1.40 million | $1.64 million | $1.59 million |
| Total Non-Interest Expenses | $28.50 million | $15.33 million | $13.81 million |
| Net (Loss) Income | $(6.29) million | $3.68 million | $6.28 million |
Balance Sheet and Cash Flow Highlights
Community West Bancshares reported total assets of $2.87 billion as of June 30, 2024, an increase of 40.54% compared to December 31, 2023. This growth was primarily due to the merger, which added $844 million in acquired deposits. Excluding the merger, deposits decreased by $16.35 million, or 0.80%. The total cost of deposits increased to 1.71% for the quarter, up from 0.98% in the previous quarter.
Capital and Liquidity
The company's capital positions remain strong, with a Tier 1 Leverage Ratio of 9.14%, a Common Equity Tier 1 Ratio of 11.36%, a Tier 1 Risk-Based Capital Ratio of 11.55%, and a Total Risk-Based Capital Ratio of 13.87%. The company declared a $0.12 per common share cash dividend, payable on August 16, 2024, to shareholders of record as of August 2, 2024.
"As a result of merger-related expenses, overall earnings were significantly reduced for the quarter ended June 30, 2024, compared to the previous quarter ended March 31, 2024. Still, the strength of the combined Company’s core earnings provides a solid base for sustained growth," added Shannon Livingston, Executive Vice President and Chief Financial Officer.
Analysis and Outlook
While the merger-related expenses have impacted the short-term financial performance, the strategic repositioning and increased net interest margin indicate a positive outlook for Community West Bancshares. The company's focus on optimizing earnings through strong loan growth and strategic repositioning of the balance sheet is expected to yield long-term benefits.
For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Community West Bancshares for further details.
